Fingrid group's interim report 1 January - 31 March 2009

Review of operations

Power system operation

A total of 23.3 (25.1) terawatt hours of electricity was consumed in Finland from the beginning of 2009 to the end of March. The economic recession and reduced industrial production decreased electricity consumption. A total of 17.5 TWh of electricity was transmitted in Fingrid’s grid during the same period, representing 75 per cent of the electricity consumption in Finland.

Because of the mild winter and recession, the electricity consumption peak was only 13,008 megawatts (13,763 MW in 2008 according to Finnish Energy Industries). The peak power was 755 MW less than the peak figure in the previous winter, and as much as 1,906 MW less than the record peak power of 14,914 MW attained two years ago.

From January to March, 0.4 TWh (1.9 TWh) of electricity was imported from Sweden into Finland, and 1.5 TWh (0.2 TWh) was exported from Finland into Sweden. Electricity imports from Russia from January to March were 3.1 TWh (2.5 TWh) and from Estonia 0.6 TWh (0.5 TWh).

During the review period, there were no significant extensive faults in the grid. The dimensioning fault in the Finnish power system had to be raised temporarily in January from the earlier level of just under 900 MW to 1,300 MW. This was due to the changes made at the Olkiluoto nuclear power plants in order to secure nuclear safety. In order to control the situation, the import capacity from Sweden has been reduced temporarily by 100-300 MW until May, and the present maximum import capacity is hence 1,750-1,950 MW. The protection changes at Olkiluoto have no impact on the export capacity.

The average price on the spot market in Nord Pool (system price) and the area price for Finland were almost the same, i.e. approx. 38 €/MWh, during the first quarter of 2009.

Maintenance work on the cross-border connection between Finland and Sweden restricted the available transmission capacity between the two countries, and transmission congestions restricted trading during 11 per cent of the hours in the early part of the year. The congestion income caused by transmission congestions on the border between Finland and Sweden totalled 0.5 million euros between January and March. The Nordic congestion income during the review period was 9.6 million euros (37.3 million euros). Fingrid´s share of this Nordic congestion income was 0.7 million euros (3.6 million euros).

A new Nordic balance service model was introduced at the beginning of 2009 in Finland, Sweden and Denmark. This reform will harmonise the rules of balance power trade in the Nordic countries. The main changes include the handling of electricity balances in two different balances –production and consumption balance – and the harmonisation of costs included in balance service. Another essential change was that production plans and regulating power bids must now be submitted 45 minutes before the beginning of each hour. The balance settlement for January was completed on schedule even though the new model required considerable changes in the procedures and data systems of both the electricity market parties and Fingrid.

Based on the Finnish act on securing the availability of peak load power reserves, Fingrid renewed the contracts for the power reserves for the period of 1 March 2009 to 28 February 2011.New principles for the starting of electricity generation by power plants covered by the power reserve arrangement on the Elspot market were taken into use in the same conjunction. The annual costs for maintaining the power reserve arrangement will increase from 10 million euros to approx. 13 million euros as a result of the new contracts. The power reserve fee was raised from 0.15 euros per MWh to 0.18 euros per MWh from 1 April 2009. The fee will be revised when needed to correspond to the actual costs and electricity consumption.

Between January and March, Fingrid’s counter trade costs were only a few thousand euros, like during the corresponding period in 2008.

The work group appointed by the Finnish Ministry of Employment and the Economy, studying the feed-in tariff for renewable energy, presented its proposal for the feed-in tariff system for wind power in the interim report published in early April. According to the proposal, Fingrid or its fully-owned subsidiary would administer the collection and payment system for the feed-in tariff for wind power. The final report of the work group will be complete by the end of June. The final report will also contain a proposal concerning a feed-in tariff for biogas electricity and an analysis of the application of the feed-in tariff arrangement to other sources of renewable energy.

Electricity marketNord Pool system price, average €/MWh Area price Finland, average €/MWh Congestion income in the Nordic countries million € Congestion income between Finland and Sweden million € Congestion income between Finland and Sweden %

1.-3. 2009 38,23 38,10

9,6

0,5

4,8

1.-3. 2008 37,99 39,27

37,3

0,1

0,3

Fingrid's share of the congestion income in the Nordic countries million €

0,7

3,6

Capital expenditure and grid maintenance

The Group’s gross capital expenditure during the review period was 16.3 million euros (13.6 million euros during the corresponding period in 2008).

In March, Fingrid completed its project extending over several years: replacement of 400 kilovolt aluminium towers. A total of 1,300 aluminium towers were replaced by steel towers over a distance of 750 kilometres because of aluminium corrosion. The project started south of Oulu in 2000 on the Pyhäselkä-Alapitkä-Huutokoski line. The last part of the project concerned line Vuolijoki-Huutokoski. The total costs of the project were approx. 32 million euros.

A grid analysis shared by Nordel and the Baltic region was completed in the early part of 2009. The analysis concluded, among other things, that a second transmission connection between Finland and Estonia is economically viable. Based on the findings, a survey concerning the implementation of the new connection has been launched. The EU has also included the project in its economy recovery package, and the use of this funding source is being studied.

Financial result

The Group’s revenue was 115 million euros (115 million euros) during the period under review. The grid tariff and Russian transmission tariff were raised by 4.5 per cent at the beginning of 2009. The other operating income was 0.5 million euros (0.4 million euros). As a result of decreasing electricity consumption, grid revenue decreased slightly despite the 4.5 per cent tariff increase carried out at the beginning of the year.

Revenue from the sales of balance power grew from the previous year to 30 million euros (27 million euros). Correspondingly, the purchases of balance power also grew to 28 million euros (23 million euros). These changes in sales and purchases were mainly due to the fact that the consumption and production balances are now handled in two different balances. Cross-border transmission income and peak load power income increased slightly from the corresponding period in 2008. ITC or inter-TSO compensations between the European TSOs grew to 3 million euros. Income and costs related to the feed-in tariff of peat decreased. Depreciation, loss energy, reserve power and personnel costs rose slightly. The changes in the first quarter from the corresponding period in 2008 are shown in the table below (in million euros).

Revenue Grid service revenue Sales of balance power Cross-border transmission ITC income Peak load power Feed-in tariff for peat Congestion income

Operating profit excluding the change in the fair value of electricity derivatives was 32 million euros (40 million euros). Operating profit decreased primarily because of reduced grid service revenue, congestion income, and result of balance service. The IFRS operating profit was 35 million euros (38 million euros), which contains 3 million euros (-2 million euros) of positive change in the fair value of electricity derivatives. The IFRS profit before taxes was 29 million euros (29 million euros). The total comprehensive income for the review period was 11 million euros (13 million euros). The equity ratio was 26.9 (27.9) per cent at the end of the review period.

The Group's income flow is characterised by seasonal fluctuations, which is why the financial result for the entire year cannot be directly estimated on the basis of the three-month result.

Financing

The financial position of the Group continued to be satisfactory. The uncertain situation in the money and capital markets continues, and it is difficult to anticipate its time frame. The net financial costs of the Group were 6 million euros (8 million euros) during the review period. Financial assets recognised at fair value in the income statement, and cash and cash equivalents amounted to 211 million euros (223 million euros) at 31 March 2009. The interest-bearing liabilities, including derivative liabilities, totalled 928 million euros (952 million euros), of which 633 million euros (732 million euros) were long-term and 295 million euros (220 million euros) were short-term.

The counterparty risk involved in the derivative contracts relating to financing was 8 million euros (9 million euros). The company has an undrawn revolving credit facility of 250 million euros.

On April 15 2009 international rating agency Fitch Ratings assigned Fingrid Oyj a Long-Term Issuer Default Rating (IDR) of ‘AA-’ (AA minus), senior unsecured debt rating of ‘AA’, and Short-Term IDR of ‘F1+’. The agency also revised the outlook on the Long-Term IDR from Stable to Negative.

Personnel

The total personnel of the Fingrid Group averaged 242 (243) during the review period.

Annual General Meeting

Fingrid Oyj's Annual General Meeting was held in Helsinki on 19 March 2009. The Annual General Meeting accepted the financial statements for 2008, adopted the income statement and balance sheet, and granted discharge from liability to the members of the Board of Directors and to the President.

Arto Lepistö, Deputy Director General, Ministry of Employment and the Economy, was elected as the Chairman of the Board, Timo Rajala, President and CEO, Pohjolan Voima Oy, as the First Deputy Chairman of the Board, and Timo Karttinen, Senior Vice President, Fortum Oyj, as the Second Deputy Chairman of the Board. The other Board members elected were Ari Koponen, Managing Director, Fortum Sähkönsiirto Oy, Ritva Nirkkonen, Fund Raising Manager, University of Jyväskylä, Special Duties, Anja Silvennoinen, Vice President, Energy, UPM-Kymmene Oyj, and Risto Autio, Director, Alternatives, Varma Mutual Pension Insurance Company.

Auditing

The consolidated figures in this Interim Report are unaudited.

Outlook for the remaining part of the year

The profit of the Fingrid Group for the entire year without the change in the fair value of derivatives is expected to decrease somewhat on the previous year.